Gome plans for growth as infighting subsides

PUBLISHED : Tuesday, 29 March, 2011, 12:00am
UPDATED : Tuesday, 29 March, 2011, 12:00am

The new chairman of mainland electronics retailer Gome Electrical Appliances Holdings has pledged to speed up growth over the next five years to narrow Gome's gap with its rivals now that the company's bitter infighting has come to an end.

Zhang Dazhong, Gome non-executive director, who took over the top spot from former chairman Chen Xiao on March 9, did not give a figure for new-store growth, but said it would definitely be more than 100. The group added 100 stores last year.

He deflected a question suggesting that his role was only transitional.

'I hope, under my leadership, the company will attain good profits and good results. The board of directors would probably love to extend the co-operation if the company performs well, so we'll see,' Zhang said.

Announcing the company's first results since Chen lost a high-profile battle for control with Wong Kwong-yu, Gome's billionaire founder now serving a 14-year jail sentence for bribery and insider trading, Zhang said he did not have a 'special personal relationship' with Wong but admired him as a leader in the sector.

'[Wong and I] were long-time competitors. We admire each other as our competition raised the quality of the home appliances business as a whole ... we have a good relationship, but it's more work-related than personal.'

Zhang, founder of Beijing Dazhong Electrical Appliances, who sold his stores to Gome in 2007 for 3.6 billion yuan (HK$4.27 billion), was seen as an ally of Wong, Gome's largest shareholder, who is not expected to repeat Chen's previous attempt to dilute Wong's shares in the company.

Wong has publicly chided Chen in the past over the company's pace of expansion, which has seen it lose the top electronic retailing spot on the mainland to Suning.

After the closure of 39 stores, Gome opened only 100 new stores last year, compared to 374 for Suning. Zhang said the company would study if the 300-odd stores privately owned by Wong should be listed as well.

Gome's president Wang Junzhou said in the next few years, the company would expand 'rapidly' in second-tier cities, set up national and regional logistics centres in Beijing, Shanghai and Guangdong and would introduce high-margin electronic goods.

Gome's shares closed 1.55 per cent lower at HK$2.54 yesterday. It will pay a dividend of 41 HK cents per share.